• Published on 8 May 2023
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BOCHK's Swap Connect promotes the opening-up of China’s financial market

Bank of China (Hong Kong) (BOCHK) welcomes the commencement of mutual access between the Mainland and Hong Kong interest rate swap markets (Swap Connect), which represents another important milestone in connecting the financial markets between the Chinese mainland and Hong Kong.

With Northbound Trading commencing first in the initial stage, Swap Connect allows Hong Kong and international investors with mainland bond holdings to access the mainland’s interbank interest rate swap market securely and conveniently through the infrastructure connection between the mainland and Hong Kong.

The scheme offers Hong Kong and international investors additional risk management tools, while also satisfying their needs for managing interest rate risks. The bank believes Swap Connect will further propel Hong Kong and international investors’ participation in the mainland bond market and push forward the internationalisation of the renminbi (RMB).

As a new initiative to deepen financial reform and foster high-quality opening-up of the Chinese mainland’s financial market, Swap Connect will help boost the development of the interest rate derivatives market on the mainland, as well as strengthen Hong Kong’s status as a global offshore Renminbi business hub and a risk management centre, thus reinforcing its position as an international financial centre.

BOCHK stands ready for the commencement of Swap Connect in terms of trading, clearing and settlement. It will act as a Hong Kong investor to access the Chinese mainland’s interbank interest rate market under Swap Connect. As a clearing member recognised by the OTC Clearing Hong Kong Limited, the bank will also offer client clearing services for Hong Kong and international investors. Besides, foreign exchange services will be provided to Hong Kong and international investors of Swap Connect.

As one of the early offshore investors to participate in the bond market and interest rate derivatives market in the Chinese mainland, BOCHK has been playing an important role in driving innovation projects in Hong Kong and the mainland financial markets. Going forward, the bank will continue to proactively serve and implement the national development initiatives, as well as support the optimisation and expansion of the mutual market access schemes between the two financial markets, with a view to strengthening Hong Kong’s status as a global offshore RMB hub and contributing to the internationalisation of RMB.

Re-disseminated by The Asian Banker